ECONOMY by VIVEK SINGH

2021-02-03 08:46:52 The above is an article from Hindu. The author presents his vies on this year Budget and Eco survey. So, those who have got a feel of budget and Survey may be able to understand that. The following are some relevant points:

1) The Washington Consensus refers to a set of free-market economic policies supported by prominent financial institutions such as the International Monetary Fund, the World Bank, and the U.S. Treasury whose head offices are in Washington. The Consensus also emphasizes on Macroeconomic Stability (Low inflation, low fiscal deficit, low debt, low current account deficit, enough forex reserves etc).

2) Govt. of India since last few years (during Modi rigime) tried for fiscal consolidation [means reducing fiscal deficit (tried for around 3%) and debt (tried reducing it to 40% as per NK Singh committee recommendation) i.e. referred as fiscal orthodoxy in the article]. But in this Budget and Eco survey they have moved away from it and the Survey proposes a higher expenditure to push for growth and this Budget has also said that fiscal deficit is going to be 9.5% 2020-21 and 6.8% in 2021-22 which is quite high.

But this time World Bank and IMF (although supporting Washington Consensus) are also arguing for a departure from fiscal orthodoxy and proposing higher spending after the covid-19 pandemic. Higher fiscal deficit also leads to ratings downgrade, but if Rating agencies are also supporting the view of World Bank and IMF , so they m ay not degrade the rating this time even if our fiscal deficit and debt has shot up.

Both these institutions IMF and World bank proposes that public debt should not go beyond 100% of GDP. (In the second last column they talk about 10% -11% public debt.... I think this is wrong, what I think is author was trying to mention fiscal deficit rather public debt. Our public debt centre and state combined has crossed 70%)

3) The present economic survey has suggested that till the time the growth rate of the economy is higher than the interest rate (cost of borrowing), then the debt/borrowing is sustainable and we do not need to worry. [The same thing I have also mentioned in the present 4th edition of the book page no 118]

4) The author also raises question regarding privatisation of PSUs. When Govt. does large scale privatisation/disinvestment then Indian private companies also purchase the Govt. company assets BUT it is mostly the foreign investors (FDI) which purchase these assets. This will be in contradiction to our push for Aatma Nirbhar Bharat. But as per my view under Aatma Nirbhar Bharat Govt. is already opening sectors for FDI investment and Govt is attracting FDI under Aatma Nirbhar Bharat, so I do not think of any contradiction. Its just that you need to understand the broader vision/philosophy of Aatma Nirbhar Bharat.

5) Govt has earlier targeted to bring down the fiscal deficit to 3% by next year as per FRBM Act, but now its not possible, so Govt. will be amending this ACT. Open / Comment

2021-02-03 08:22:21 Open / Comment

2021-02-02 08:22:40 Good Morning to all of you
There is a lot of news regarding budget in the newspapers today which you can read on your own.

I am reading the Budget and Economic Survey and preparing notes keeping in mind what is relevant for your exam. I will share the PDF in the next 4/5 days and it will also be incorporated in the upcoming Book (15th Feb) at the relevant place in specific chapters so that u do not need to mug up these things rather understand it properly connected with every topic. And if I feel that there are certain topics which are complex then I may record some video also. Till that time you guys focus on your syllabus and of course read todays newspapers so that you get a feel on which things the Govt. (budget) is laying emphasis on for the development of the country. Open / Comment

2021-02-01 07:32:54 Nothing relevant for Economy Today in HINDU/EXPRESS/PIB.
If possible watch the budget speech today live @11.00 am Open / Comment

2021-01-31 08:24:08 The above is news from HINDU. Let us understand properly.

Cryptocurrencies are not legal tender but as such there is no ban on trading in cryptocurrencies. What it means is if I purchased something then I can not ask the seller to accept cryptocurrency. But if I want to purchase cryptocurrency (bitcoin) then I can always pay in rupee (or other currency) and purchase the bitcoins.

Cryptocurrencies acquire value as they can be generated/mined only in limited number and if more and more people are willing to hold/possess it, its value increases. For example, if a "rare" metal got discovered and suppose it is of no commercial use but everyone wants to keep that metal in their home (for no specific reason) and if the metal supply is very limited then of course the price of metal will shoot up and it may in future it can decline. Exactly same thing is with Bitcoins (cryptocurrency). It can be created only in limited number (for its own scientific reason) through computing technology. Now, if its supply is limited and for whatever reason everyone wants to posses bitcoins then its price will shoot up and it can come down also without any specific reason if people would not like to hold that bitcoin. (that is the simple logic behind all the spike/crash in prices of bitcoins in the past)

In a circular in April 2018, RBI had imposed a virtual ban on cryptocurrency trading in India and had directed all entities which fall under the purview of (regulated by) RBI i.e. banks/NBFCs to not deal in virtual currencies or provide services to those who want to deal in it. In March 2020 the Supreme court has set aside (quashed) the order, allowing trade in digital assets.

Now, Government will introduce a bill in the present Budget Session "The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021". The bill aims to create a facilitative framework for the official digital currency to be issued by the Reserve Bank of India. The bill also seeks to prohibit all private cryptocurrencies in India (earlier RBI prohibited but Supreme Court removed the prohibition BUT now Govt. is planning a ban through an ACT), however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.

Digital Money
Digital money, or digital currency, is any form of money or payment that exists ONLY in electronic form. Cryptocurrency is a type of digital money that is secured by cryptography, making it almost impossible to counterfeit or double-spend (and its not a legal tender). The new Bill talks about Official Digital Currency which will be backed by RBI which means it will be a legal tender and there may not be any limit on its creation. The details will be clarified by RBI in future. So, for the time being this much of information is sufficient. Open / Comment

2021-01-31 08:09:50 Open / Comment

2021-01-30 09:30:38 How should UPSC students read Economic Survey 2020-21 [OR] is it really required to read Economic Survey 2020-21 ??

Answer: Just scanned the pages of the Survey both volumes I & II. The following is my observation for UPSC aspirants

1) It is 700 page document (Vol I & II) and very technical in nature. The first volume discusses all the Mathematical models which is of no significance for aspirants. The second volume has relevant topics but it captures so much of data that I do not see that any student can read and remember it. Every exam has specific requirements. The way the information is presented in the Survey, any student will get lost while reading it and he cannot extract the relevant info from it. 90% of the things is irrelevant for UPSC aspirants and may be less than 10% relevant but the way its intermixed, its very difficult for students to read and extract and so much of data that only teacher can inter relate it. Looking at the economic data without inter relating has no significance as u just cant remember.

As you guys must have realized that, this Channel is presenting the information and data in a particular way and only relevant things so that it makes sense for students and they can understand and retain the things. I am not criticizing Eco Survey, I am just saying that the target audience is not USPC students.

I am religiously reading the Survey for last 8 years and following UPSC questions too and with experience I know what information should be given to you and in which manner. For example there were 1000s of graphs last year in Survey and I just gave few (around 10) in my ECO 500 and there was a ditto question from the graph which I gave. For example see this link https://t.me/VivekSingh_Economy/2462 and the same thing happened in mains also few days back.

So, I am reading the Survey properly and its relevant information will be integrated in the upcoming BOOK (15th Feb) and MCQ (mid April) depending on the type of content. If I see something technical/complex I will provide video also (but do not wait for it).

Teaching Economic Survey Exclusively (or launching a course for it) is a disaster for students. It is always better to focus on your syllabus and see if there is anything extra relevant from the Economic Survey.

But as a UPSC aspirant, to get a feel of economic survey you can read todays newspapers HINDU/EXPRESS which are full of articles regarding what the Survey is trying to emphasize on. You can also see these pib links for summary of Survey:
https://pib.gov.in/PressReleasePage.aspx?PRID=1693232
https://pib.gov.in/PressReleasePage.aspx?PRID=1693231

So, relax and focus on syllabus and let me also focus on the Book (15th Feb) and ECO MCQ (Mid April) which will cover everything in proper way. Open / Comment